Expect Inflation...........to 30% And On Up To 70% And Higher.

https://www.blackrockblog.com/2019/...il&utm_term=0_7beec13d69-64d5638776-305445649

 

I remember 22% interest on home loans in the late 70's.

 

The issue is that we have a financial system that relies on continuing growth within a finite set of resources. It is the big flaw of Capitalism. When Adam Smith wrote Wealth of Nations and coined the term capitalism it was in a time when the world's population was tiny compared to today, and the thinking was that resources were limitless (in a way they were back then and if the population had remained the same as in the 18th century we would not have many of the current global problems).

The key question is what could Capitalism be replaced with that would be accepted as an alernative system. Communism has been shown over time not to work (and would be deeply unpopular in the western world).

We will be faced with higher inflation in the future as resources get scarce. Are we seeing the beginning of the end of Capitalism? I suspect we are, the signs are there. Tough times ahead for many folks

 

Inflation will vary from country to country and for different reasons . Some of South Americas countries can be drawn out as examples of hyper inflation due to poor government systems . Countries that were depending on U.S. generosity to holdup their flawed government systems are howling when the resources from an successful government slowed down . They lash out in anger spouting fake news as truth as they search to blame their plight on the U.S. . Even within the U.S. we have communist wanting to take over the government HOPING for inflation as they know as things stand today Donald Trump will be in charge of our government for five more years . The central banks at this point play very far down the track as far as inflation goes . Inflation is kicking in big time in some countries but they need to look at themselves for the cause and the solution .

 

I see this trade war and the resulting tariffs as an intentional effort to drive up cost of goods, a step in stimulating wage increases, and a general effort to stimulate inflation, with the goal of kicking the can down the road. Inflation is the only cure for the National Debt.

 

Sourddough I actually agree with your view that this is an intentional effort to drive up the cost of goods . My other view is that citizens of nearly all "if not all " countries or a spoiled bunch of woosies . They have learned to expect exported goods to bring them wealth and imported goods to bring them LUXURIES . They refuse to stand on their own ability and survive and make do with what their own country can provide . I am sure our Alaska members know how to catch a fish , kill a moose and live without all that fancy stuff . Many countries have gone way past being able to feed its own population and are way past a need for a population reset . I suppose that is a cold attitude but I try to be realistic .

 

"Fed Tricks Markets with Trillion-Dollar Clandestine Tightening"
-- David Haggith

Old Geezer note: I have cut'n'pasted salient snippets out of this economist's article. The entirety of the article bears reading. This current US administration is playing some seriously dangerous games with the dollar and the US economy. It is like watching plate-spinning at a circus, except that the number of plates is getting far beyond control and the some of the plates are explosive. There is bad inflation, then there is hyperinflation in which currencies collapse. Prepper note: get your barter items ready. Get-in your survival stores now, because you will not be able to pay for your needs in dollars come the near future. The windows are closing.

https://goldseek.com/article/fed-tricks-markets-trillion-dollar-clandestine-tightening

"While the Fed’s current tightening is not exactly a well-kept secret, stock and bond markets seem willing to ignore what the Fed’s left hand is taking away as the right hand is giving. Reverse repurchase agreements, which I have been tracking here, have exploded to a trillion dollars in money that the Fed is sucking out of the financial system.

"The Fed’s dizzy feedback loop

"The Fed is effectively being forced by interest rates within the intra-banking system to take as much cash out of bank reserve accounts as it is adding via its purchases of government debt at the other end of the spectrum, thus neutralizing all of its own QE. Now, why would it do that?

"On the one side, the Fed continues to add $120 billion in QE per month, which is adding huge inflows to bank reserves as follows: The government is spending the money created through its bond issuances (which the Fed funds by purchasing those bonds from banks with newly created money to establish a bottomless market for the banks to resell government bonds into). That money the government raises with those bonds then gets deposited by the government’s numerous vendors into bank accounts where it adds to bank reserves when the government checks clear via its banker, the Fed. The government also transfers money into bank reserves when the treasury issues stimulus checks as well as unemployment bonuses to ordinary people via state unemployment offices that distribute those federal stimulus funds.

"On the other side, the Fed is sucking that much money back out of reserves each month by trading its vast hoard of government bonds back to banks as collateral in exchange for their cash “loans” to the Fed from their reserves. (Banks need to get rid of the excess cash that is piling up in their reserve accounts as they are required by the Fed to raise additional capital if their reserves expand.)

"This is a bizarre picture in which the Fed seems to be creating its own problems. ...

"It is a 'Keep looking at what my right hand is doing (doling the money) so you don’t see what my left hand is doing (taking away the money)' kind of sleight of hand. ...

"The only explanation I can think of for deliberately creating this bizarre loop is that the Fed has to keep funding the federal government and is trying to manage the now perilous side effects that massive funding is creating.

"It won’t take many more months before inflation creates its own self-reinforcing feedback loop. That happens when businesses price up their goods and services in anticipation of future inflation. For example, a housing contractor decides she needs to pad her bid by an additional 10% to be safe because she fears the cost of material will rise that much before construction even begins (due to time delays in getting permits, etc.). In such cases, prices rise before costs rise simply because of beliefs about what inflation is going to do. We’re not used to thinking that way because we’ve lived in a low-inflation environment for so long; but inflation doesn’t need to run hot for long before people start pricing it in advance.

"... This is not your father’s inflation. This has the ingredients to be the seventies on steroids. (We are actually already as bad off as the seventies if we measured inflation the same way it was measure back then when it hit double digits.)

"We have experienced an economic regime change just as we did from the Great Recession. As a result of these permanent changes (in some cases, mid-to-longterm in others), which that Patron Post laid out in detail, the Fed is not going to catch a break from this inflationary cycle. The Fed’s obscured tightening isn’t going to do the job any better than “not QE” ended the Repo Crisis. Now that reverse repos have hit the trillion-dollar threshold, we are witnessing how the Reverse Repo Crisis is increasingly going out of control just as the Repo Crisis did.

"I want to close by thanking those patrons who have kept me at this. I hope people are finding it helpful, as I don’t think this analysis of the Fed’s actions or its lack of an end game is covered well in mainstream financial media, which seems endlessly willing to keep believing the Fed has everything under control and to keep parroting what the Fed tells it, even though we’ve seen the Fed fail several times before, and this fail could be its worst."